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CIMA Exam CIMAPRO19-P03-1 Topic 6 Question 68 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 68
Topic #: 6
[All CIMAPRO19-P03-1 Questions]

Which of the following will increase the value of a call option?

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Suggested Answer: B, E, F

by Yuette at May 17, 2024, 01:13 PM

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Chauncey
15 days ago
Okay, let's see here... An increase in the strike price, a decrease in the volatility, a decrease in the market value? Sounds like a recipe for the world's saddest call option. I'm going with B - an increase in the time to expiry. That way, at least the option has a chance to eventually make me a millionaire. Or bankrupt me, whatever.
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Barabara
20 days ago
Oof, options questions always make my head spin. But I've got this one figured out. The answer has to be B - an increase in the time to expiry. It's like a fine wine, the longer it has to age, the better it gets. Or something like that, I don't know, I'm just winging it here.
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Geoffrey
28 days ago
Oh, this is a tricky one! I was tempted to say C, but then I remembered that higher volatility means more potential for the share price to increase, which would increase the value of the call option. Yeah, B is the way to go, no doubt about it.
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Howard
4 days ago
User 1: I think B is the correct answer.
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Alline
1 months ago
Hmm, let me think about this... An increase in the strike price would actually decrease the value of a call option, so that's not it. And a decrease in the market value of the share? That's just crazy talk. I'm going with B - gotta be the time to expiry.
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Sheridan
9 days ago
User 4: That makes sense, time to expiry would definitely increase the value.
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Adelle
19 days ago
User 3: I agree, I'm going with B) An increase in the time to expiry.
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Daniela
20 days ago
User 3: I agree with Elouise, I think it's A) An increase in the strike price.
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Yoko
21 days ago
User 2: No, that would actually decrease the value of a call option.
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Elouise
27 days ago
User 2: Elouise, that would actually decrease the value of a call option.
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Lynna
28 days ago
User 1: I think it's A) An increase in the strike price.
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Youlanda
30 days ago
User 1: I think it's A) An increase in the strike price.
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Curt
2 months ago
Aha, this is a classic options question! I'm pretty sure the answer is B - an increase in the time to expiry. The longer the option has until it expires, the more time it has to increase in value. Easy peasy!
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Donette
3 days ago
Artie: Oh, I see! Thanks for clarifying, Page and Donette.
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Page
8 days ago
User 3: I agree with Page, an increase in the time to expiry will increase the value of a call option.
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Artie
19 days ago
User 2: Artie, I believe the correct answer is B) An increase in the time to expiry.
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Shoshana
28 days ago
User 1: I think the answer is A) An increase in the strike price.
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Eileen
2 months ago
But wouldn't an increase in the time to expiry also increase the value of the call option?
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Kaycee
2 months ago
I agree with Quinn. A higher strike price means the option is more likely to be in-the-money.
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Quinn
2 months ago
I think an increase in the strike price will increase the value of a call option.
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